Officials hopeful a cracker plant could still come to WV

April 25, 2012

FAIRMONT - The liquids-rich Marcellus and Utica shale gas underlying northern West Virginia could still help the state land at least one ethane "cracker" [facility], jumpstarting the state's manufacturing sector, officials believe.

"We have the building blocks, a trained chemical workforce, abundant supplies of ethane-rich natural gas, and a robust infrastructure," said West Virginia Secretary of Commerce Keith Burdette. "Just from an operational picture, a world class cracker will likely require an investment from $3 billion to $5 billion."

Burdette spoke during a recent special hearing of the Senate Committee on Commerce, Science, and Transportation in Fairmont. Sen. Jay Rockefeller, D-W.Va., serves as chairman of this Senate committee, while Reps. David McKinley and Shelley Moore Capito, both R-W.Va., joined Rockefeller for the session.

Although Burdette admits that Royal Dutch Shell's recent announcement to build the cracker plant along the Ohio River northwest of Pittsburgh was disappointing, he stressed the Mountain State is still going to benefit - and could still land a plant of its own.

When asked if he had spoken with any potential cracker developers about building in West Virginia, Rockefeller said he had not, though adding of the chemical plant, "All of us want that."

Noting "there is going to be a second or even a third cracker," McKinley said he does not want to see these plants also go to other states because of West Virginia's railroad shipping costs not being competitive.

"Should we be trying to expand our rails again?" McKinley said to Dean Piacente, vice president of chemicals and fertilizer for railroad operator CSX Transportation Inc.

"That's tough to do," Piacente responded, noting he believes the shipping rates his company offered to entice Shell to build the cracker in West Virginia were competitive.

"I want to make sure our people get the jobs," McKinley added regarding an ethane cracker.

Piacente said the natural gas rush is creating opportunities for trains to move sand, crude oil, pipe and the raw materials and scrap metal to make pipes. Recently, his company opened a new Fairmont facility to handle fracking sand, similar to a site in Benwood.

Also in regard to the liquids-rich gas, Chesapeake Vice President of Corporate Development and State Government Relations Scott Rotruck mentioned his company's strong position as the largest producer in West Virginia's Northern Panhandle, as well as eastern Ohio.

"We have the best slice of this - the wet gas window. This is very bullish," he said regarding the value of the ethane, butane, propane and pentanes found in this gas.

Corky DeMarco, executive director of the West Virginia Oil and Natural Gas Association, found himself in an interesting exchange with Rockefeller regarding the specific locations of natural gas transmission and gathering lines. When Rockefeller asked why more of this information is not available to the public, DeMarco said it was a matter of "national security," so as to prevent a potential terrorist from locating a pipeline they may want to detonate.

"That's not an answer," Rockefeller said.

DeMarco then assured Rockefeller that gas companies share enough information so that there are no safety hazards. He also said the Public Service Commission of West Virginia has some regulatory authority over the lines.

Steve White, director of the Affiliated Construction Trades Foundation, also spoke at the hearing. Though emphasizing he supports development of the natural gas and the infrastructure needed to process and transport it, White said more local employees need to be given a chance to work on such projects.

"Unfortunately, too many companies are importing workers, and too many local businesses are not given a chance to bid projects," he wrote in his official testimony. "We need to encourage all companies to hire locally."

Although never mentioning Dominion Resources by name, White and ACT have been been at odds with Dominion and Chicago Bridge and Iron for work on the $500 million processing plant at Natrium. Dominion hired CB&I to build the plant that Dominion will operate once it is finished.

"It is hard for West Virginians to see out-of-state workers taking these jobs," he added.